C21 Market Pulse | May 2023 | New Zealand

C21

WELCOME TO THE May 2023

ISSUE OF C21 M aRKET PULSE

PUBLISHER

Century 21 New Zealand Ltd

CONTRIBUTORS

Tim Kearins

Jen Baird

Cameron Brewer

EDITORI a L ENQUIRIES

Century 21 New Zealand

+64 9414 6041

a DVERTISING ENQUIRIES

Century 21 New Zealand

+64 9414 6041

DISCL a IMER

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E aSING LVRS

GOOD NEWS FOR FIRST-HOME BU y ERS

BY TIM KEARINS, CENTURY 21 NEW ZEALAND

It’s good news that the Reserve Bank is easing LVR (loan-to-value ratio) restrictions. It’s not only helpful for first-home buyers, but will be a timely boost for the wider real estate sector.

The Reserve Bank will ease LVR restrictions from 1 June, from a 10% to 15% limit for home loans with an LVR above 80% for owner occupiers, and a 5% limit for loans with an LVR above 60% to a 5% limit for loans with an LVR above 65% for investors.

Restrictions on high-LVR residential mortgage lending set a ‘speed limit’ on how much new low-deposit lending banks can do. Current LVR settings were put in place November 2021 when risks were elevated. The Reserve Bank now believes current restrictions may be unnecessarily reducing efficiency and impeding the provision of credit to some otherwise creditworthy borrowers. The fact that banks will soon be able to approve up to 15% of their new lending to owner-occupiers borrowing more than 80% is good news. In short it means, fewer first-home buyers will need a 20% deposit to buy a house.

This will go some way to improving access to credit, with the hurdles still proving too high for many despite applicants’ ability to earn and service a mortgage.

A 20% deposit is a big ask in this environment when everyone is dealing with a cost-of-living crisis. This move will enable a few more Kiwis to get over the line and onto the housing ladder.

REINZ has released its Monthly Property Report for April – a month which saw median prices across New Zealand decrease 10.9% yearon-year to $780,000. Days to sell have risen to 47 days for April 2023 – up nine days compared to April last year.

It’s pretty slow, but understandably. Kiwis are playing a wait and see game – as to inflation peaking, interest rates settling, and of course we have a general election in October which always sees some stalling. For those looking to buy, however, opportunities are plentiful with vendors increasingly realistic. Those paying sky-high rents and seeing softening purchase prices should also look into government assistance schemes on offer, including First Home Grants, First Home Loans, and First Home Partner.

First Home Grants give eligible first-home buyers up to $20,000 for a deposit. First Home Loans allow eligible buyers to purchase a home with a five percent deposit with no price caps. First Home Partner is a shared ownership scheme to help aspiring first-home buyers purchase a home together with Kāinga Ora.

Prospective borrowers should not give up, with mortgage brokers like Julius Capilitan of Century 21 Financial well worth an approach. We know it has been frustrating, but a lesser deposit could now be doable. Borrowers may also be eligible for one of the Government’s first-home schemes. Given all the property opportunities out there this winter, we’re saying to renters, borrowing and buying is now well worth a second look.

www.century21.co.nz

H OLIDayS a DD TO M a RKET SLOW-DOWN, B UT GREEN SHOOTS BEGIN TO EMERGE

BY JEN BAIRD, REINZ CEO

The Real Estate Institute of New Zealand’s (REINZ) April 2023 figures show the continuing challenge of the economic climate has put further pressure on market pace.

REINZ Chief Executive Jen Baird says April tends to be slow due to public and school holidays, and it’s clear those factors combined with a tight economy are still influencing the market.

in the market this month as first home buyers show more interest after the Reserve Bank’s announced on the easing of LVR restrictions. Our members are seeing further alignment as vendors come with

decreased 2.2%. “Inventory levels have decreased slightly month-onmonth, but the year-on-year figures are still showing an increase as the current pressure on mortgage rates supressing buyer activity,” says Baird.

Nationally, the April 2023 median price decreased 10.9 year-on-year to $780,000. Days to sell have risen to 47 days for April 2023 – up 9 days compared to April 2022 and up 2 days from 45 when compared to March 2023. The West Coast and Otago regions saw an annual increase in median price – up 8.6% to $379,000 and 3.2% to $680,000 respectively.

Two districts reached record median prices: Grey District ($398,000) and Ashburton District ($615,000).

“Salespeople across the country are reporting glimpses of green shoots

a desire to meet the market – those who are prepared to negotiate and be realistic are the ones selling, there are buyers out there ready to buy. Two districts reached record median prices in April,” states Baird. At the end of April, the total number of properties for sale across New Zealand was 28,643 up 1,593 properties (+5.9%) year-on-year, and down 2.19% month-on-month. New Zealand excluding Auckland was also up from 17,060 to 18,351 an increase of 1,291 properties annually (+7.6%). Month-on-month, inventory

The total number of properties sold across New Zealand in April 2023 was 4,262, down from 5,984 in March 2023 (-28.8%), and down 15.3% year-on-year. New Zealand excluding Auckland sales counts decreased by 11.5% year-on-year and 26.9% month-on-month. While that seems a considerable fall, in seasonally adjusted terms April was 8.1% stronger when compared to the usual seasonal change we would see at this time of year.

Nationally, new listings decreased by 18.9%, from 8,806 listings in April 2022 to 7,142 listings in April 2023. Compared to March 2023, listings decreased by 22.7% from 9,242 to 7,142. New Zealand excluding Auckland listings decreased 20.0% year-on-year

"OVERALL, MEDIAN PRICES HAVE DECREASED ACROSS NEW ZEALAND BUT ARE MODERATING, SALES COUNTS HAVE EASED ANNUALLY, AND INVENTORY LEVELS HAVE STABILISED, ADDS BAIRD."

ANNUAL MEDIAN PRICE CHANGES

from 5,780 to 4,626. Auckland’s listings were down 16.9% from 3,026 to 2,516 year-on-year. “New Zealanders are waiting for the peak of inflation, a settling in interest rates and some clarity around the outcome of this year’s election. This is what is keeping activity low. However, for those looking to buy, lower prices and good stock levels means there are opportunities as we head into the cooler months.”

“We won’t know if we are at the bottom of the market until we have passed it, so for those who can get their financial ducks in a row, now is a good time to buy,” suggests Baird.

The REINZ House Price Index (HPI) for New Zealand which measures

the changing value of residential property nationwide showed an annual decrease of -12.0% for New Zealand and a -10.7% decrease for New Zealand excluding Auckland.

Click here to read the full report

Source: REINZ Monthly Property Report 11 May 2023 .

BAY

T EMPTING FOR SOME, BUT SELLING PRIVaTELy COULD BE COSTLy

“In a softer or challenging real estate market, some Kiwis could be tempted into trying to sell their homes privately to save on commission. The reality is, it’s likely to end up costing them more,” says Tim Kearins, Owner of Century 21 New Zealand.

“In fact, during these times, real estate agents become really important,” he says.

Mr Kearins says extensive industry analysis, conducted by REINZ, has in the past shown that engaging an agent to sell a home could achieve the vendor the highest premium in two decades. In fact, homeowners who use a real estate agent could get on average 15% more for their property than they would by selling it privately.

“REINZ’s research has shown time and time again that while selling privately may save vendors commission, they’ll end up with less on average compared to what an agent would’ve delivered,” he says. The message that private sales often cost money, not save it, is getting through. REINZ’s analysis also showed a decrease in the percentage of people choosing to sell their property privately –which was down to 14% in 2020.

The Century 21 leader says in a challenging real estate market,

securing the right agent is all-important.

“In times like this it’s good agents, not advertising, who sell properties. They need to be hungry, fully prepared, and have the skill to target the most likely buyers and keep them interested. Critically, they then need to deliver a successful real estate negotiation and sale,” he says. Another catch with private sales, Mr Kearins says, is the fact that a buyer knows a vendor won’t be paying for commission in a private sale. Subsequently, they often use that as a negotiating tool from the outset to reduce the price accordingly.

“It’s important for vendors to remember demand for property remains, with new buyers entering the market every month. A good agent and agency will find them,” he says.

Other skills and advantages dealing with an agent include legal protections for vendors, honed negotiating skills, and a wide network of contacts.

“Human nature also dictates that many buyers simply don’t like dealing with sellers directly. They’d rather liaise with a professional third party. Overall, it’s easy to see why agents continue to achieve the best sales result for a property,” he says.

Tim Kearins says since the Covid-19 lockdowns and restrictions more buyers have got used to doing their shortlisting online. Hence, a property’s online appearance and cut-through is more critical than ever.

“A good agent and agency can deliver a world-class marketing package at considerably less cost than what most individuals could achieve,” he says.

Given New Zealand is once again seeing more immigration, Century 21’s international reach is also increasingly appealing to vendors. Every listing goes onto Century 21’s global website which can be translated into 19 different languages. www.century21.co.nz

V ENDORS MUST Ta KE THEIR TIME SELECTING THEIR AGENT

“In a challenging real estate market, the agent is all-important. They need to be hungry, fully prepared, and have the skill to target the most likely buyers and keep them interested,” says Tim Kearins, Owner of Century 21 New Zealand.

Mr Kearins says people, not advertising, sell properties in quieter or challenging times.

“It’s important for vendors to remember that even in tough times demand for property remains, with new buyers entering the market every month. A good agent and agency will find them and deliver a successful real estate negotiation and sale,” he says.

The Century 21 leader says prior to marketing, an agent should work hard with a vendor to settle on an acceptable agreed price. Accurately pricing a house from the outset is key, as is then defending that property’s price.

“It’s more important than ever for vendors to engage a proven and proactive professional. Buyers are taking their time and throwing out cheeky offers, so vendors need an agent who can push back on their behalf yet still close a deal. In this market, advertising, charm, or good luck won’t be enough,” says Mr Kearins.

When choosing an agent, best practice includes requesting recent

references, seeking out how they’ll attract the right prospective buyers and achieve the best possible price, who will manage the open homes, and how they’ll work with their colleagues to widen the net.

“Many vendors get disappointed that the agent they engage ends up not to be the one who fronts the open homes or potential buyers. Most vendors want their chosen agent to front every weekend, but they need to make sure that’s going to happen,” he says.

The realty boss suggests that vendors ask their agent to physically take them through their planned walkthrough. Knowing how agents will show a house will then help vendors better present it.

“It is important for your agent to maintain confidence in the agreed, realistic sale price until all possibilities have been explored. If a buyer senses any hesitation or doubt from the agent regarding the property's value, they may be more inclined to make lower offers,” says Mr Kearins.

A good agent will also be aware of government-assistant schemes first-home buyers may be eligible for, as well as any avenues and opportunities out there if buyers are having trouble securing finance.

Local Century 21 clients and offices have access to their own broker, giving the real estate brand a distinct advantage in the New Zealand marketplace where borrowing for many remains difficult to achieve.

“Many buyers presume it all begins and ends with the big banks. However, mortgage brokers like Julius Capilitan of Century 21 Financial do all the running around, to deliver competitive rates and greater borrowing flexibility than the traditional lenders,” says Tim Kearins.

Century 21’s international reach is increasingly appealing to vendors, given New Zealand is once again seeing more immigration. Every listing goes onto Century 21’s global website which can be translated into 19 different languages.

www.century21.co.nz